Vast majority of UK public want Government to take action on economic crime in British Overseas Territories
Our friends at the UK Anti-Corruption Coalition (UKACC) have today released polling results on Britain’s role in tackling economic crime in its offshore financial centres. It comes as British Overseas Territories* representatives arrive in London for a key meeting, which is set to include a discussion on public registers of beneficial ownership.
At first glance it may not seem obvious why this should matter for responsible tax, but ownership transparency has been a core part of our Fair Tax Mark accreditation standards from the outset. This is because robust public disclosure of who ultimately owns and controls a business leaves bad actors, from tax dodgers to money launderers, with nowhere to hide. Transparency measures designed to tackle corruption and money laundering, such as public beneficial ownership registers, often address tax dodging too.
New Survation polling from UKACC shows an overwhelming majority of the UK public – 72.28% – think the UK government “should take more responsibility to work with Britain’s offshore financial centres to tackle money laundering and tax evasion”.
The finding comes as senior representatives from Britain’s Overseas Territories arrive in the UK this week for a key Joint Ministerial Council meeting with the UK Government. On the agenda will be a discussion about timelines for the territories introducing public registers of beneficial ownership – something that Westminster legislated for in 2018, and which the Overseas Territories committed to in 2020.
“The results of this poll are damning. Our Overseas Territories and Crown Dependencies must bring an end to the decades of secrecy which have allowed wealthy oligarchs, criminal gangs, drug smugglers and human traffickers to hide and launder their dirty money.”
Senior backbencher and Chair of the APPG on Anti-Corruption and Responsible Tax, Dame Margaret Hodge MP
Britain and its offshore financial centres enabling economic crime
Britain and several of its offshore financial centres have long provided safe haven for the proceeds of corruption and other economic crimes. In the UK, Russian oligarchs have hidden their assets in our property market; professional lawyers and accountants have used UK-based shell companies to facilitate money laundering; and elaborate tax dodging schemes have been enabled by opaque financial instruments. However, with two rafts of economic crime legislation being passed in the UK in the last two years, calls are now growing for Britain’s offshore financial centres to play their part.
“With every tick of the clock, the secrecies afforded by the UK’s offshore tax havens enable tax dodgers and money launderers to hide illegal gains and taxable assets from authorities. Meeting the deadline for robust and public beneficial ownership registers across the Overseas Territories would be a welcome boost for fair tax and anti-corruption alike.”
Jaime Boswell, Head of Accreditation, Fair Tax Foundation
British Virgin Island companies top list of offshore corruption cases
In a 2018 report, our fellow UKACC member organisation Transparency International UK (TI-UK) used evidence from 237 corruption cases to show how 1,201 different companies registered in the overseas territories had aided gross abuses of entrusted power for private gain around the world. The British Virgin Islands featured most prominently in this analysis – of the 1,201 entities identified 1,107 (92 per cent) were registered in this jurisdiction.
In financial terms, the team found that over £250 billion worth of funds were diverted by rigged procurement, bribery, embezzlement and the unlawful acquisition of state assets across 79 different countries.
“It’s hard to ignore the scale of economic crime exploiting some of Britain’s offshore financial centres, so progress by the Overseas Territories toward delivering on their commitment to introduce transparent company ownership registers is to be welcomed.
“However, it appears that most of these territories are far from being on track to meet the deadline for implementing these registers by the end of this year. As representatives from the Overseas Territories meet with the UK Government this week, all in attendance should be clear that stamping out economic crime is in the interests of the whole British family – and that this will mean the Overseas Territories fully delivering on the commitments they have made.”
Duncan Hames, Director of Policy at Transparency International UK
Keeping ill-gotten gains hidden
In the TI-UK report, former Soviet states featured in the most cases. Russia, Ukraine, Kazakhstan and Azerbaijan were among the top five jurisdictions in which cases involving companies registered in the Overseas Territories were identified. Russian individuals sanctioned in response to the Ukraine War have been linked to corporate entities in these jurisdictions – potentially helping them hide their assets.
Calls for greater transparency in the Overseas Territories have gained traction across the world among anti-corruption, anti-tax evasion and anti-economic crime campaigners. British Parliament has expressed its concern too, for example via the Foreign Affairs Committee.
*The 14 UK Overseas Territories are: Akrotiri and Dhekelia; Anguilla; Ascension, St Helena and Tristan da Cunha; Bermuda; British Antarctic Territory; British Indian Ocean Territory; British Virgin Islands; Cayman Islands; Falkland Islands; Gibraltar; Montserrat; Pitcairn; South Georgia & The South Sandwich Islands; Turks and Caicos Islands.